More Stories

Informist, Thursday, Oct. 9, 2025

MUMBAI – Government bond prices may open steady on caution ahead of the weekly gilt auction at 1030-1130 IST Friday, dealers said. The government will sell INR 160 billion of the 6.68%, 2040 bond and INR 120 billion of the 6.90%, 2065 gilt Friday.

Traders may demand higher returns to pick up the 2040 bond, especially as its share of supply in the Oct-Mar borrowing calendar remains high. However, demand from pension funds and life insurers for the 2065 gilt is seen to be firm at the first auction of long-term gilts in Oct-Mar. The share of supply for 30-50-year bonds was cut in the calendar and state bond issuance in Oct-Dec is also scheduled to be lower than expected, which is likely to bring in demand from both investors and traders, dealers said.

Overnight indexed swap rates may take cues from the movement in the overnight Mumbai Interbank Offer Rate, which has dictated the movement over the last few days, dealers said. The overnight MIBOR is the floating leg of the OIS contract, and fell earlier this week before climbing to the policy repo rate of 5.50% Thursday.

Geopolitical developments, rupee and crude oil price movements, as well as movements in US Treasury yields may influence gilts and swap rates Friday. The impact of these offshore triggers may be limited before the auction and with traders' focus on domestic monetary policy easing, dealers said. 

The three-day call rate may open at the Reserve Bank of India's repo rate of 5.50% on Friday due to demand for funds from banks amid initial public offerings. During the day, the three-day call money rate is seen in the range of 4.90-5.75%, dealers said.

GOVERNMENT BONDS

On Friday, government bonds may open steady on caution ahead of the INR-280-billion weekly gilt auction at 1030-1130 IST, dealers said. The auction is likely to sail through, though some traders may place short bets.

The RBI's Monetary Policy Committee last week said there was room to ease monetary policy further to support growth. The 2035 bond yield is seen falling as low as 6.40% before the next policy review in December, but bouts of profit-taking have erased gains as traders await fresh economic data, dealers said. The yield on the 10-year benchmark 6.33%, 2035 bond is seen at 6.48-6.55% Friday. On Thursday, the 2035 bond ended at INR 98.63, or 6.52% yield. 

OIS RATES

OIS rates may take cues from the movement in the overnight MIBOR which has dictated the movement this week. Traders may continue receiving fixed rates and ramp up bets of one or more rate cuts in December and beyond after the MPC signalled that low inflation had opened space for policy easing, dealers said.

Traders will watch out for any further fine-tuning of liquidity operations by the RBI, dealers said. On the global front, traders may track developments in the US after the government partially shut down last week, as well as crude oil prices.

The one-year swap rate is seen in the range of 5.40-5.50% and the five-year contract at 5.62-5.73%. On Thursday, the one-year swap rate ended at 5.42% and the five-year swap rate ended at 5.63%. 

CALL

The three-day call rate may open at the Reserve Bank of India's repo rate of 5.50% on Friday due to demand for funds from banks amid initial public offerings. During the day, the three-day call money rate is seen in the range of 4.90-5.75%, dealers said.

A lack of a variable rate reverse repo operation announcement may keep rates in check, especially as the overnight auction from Thursday will reverse and add INR 468.60 billion back into the banking system. On Thursday, the one-day call rate ended at 5.75%, its highest since Jun. 3.

RBI AUCTION

--Govt to sell two gilts worth INR 280 billion

LIQUIDITY

Total net inflows of INR 142.66 billion. The calculation of flows does not take into account redemption of the standing deposit facility and scheduled variable rate repo and variable rate reverse repo operations.

* Inflows

--INR 50.01 billion on redemption of 182-day Treasury bills

--INR 19.48 billion as coupon on state bonds

--INR 35.93 billion as coupon on 7.06%, 2028 bond

--INR 37.24 billion as coupon on 7.06%, 2046 bond

--INR 468.60 billion as reversal of overnight VRRR auction

* Outflows

--Nil

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Aaryan Khanna

Edited by Deepshikha Bhardwaj

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.